Wesco International, Inc. · NYSE:WCC
Wesco International — Q2 2024 Earnings Presentation
29 slides from Wesco International's earnings presentation, Aug 1, 2024
Slide 1: Second Quarter 2024 Webcast Presentation
NYSE: WCC Second Quarter 2024 Webcast Presentation August 1, 2024
Slide 2: Forward-Looking Statements
Forward-Looking Statements All statements made herein that are not historical facts should be considered as "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements involve known and unknown risks, uncertainties and other factors that m
Slide 3: Second Quarter Summary and Outlook
Second Quarter Summary and Outlook Results were somewhat below our expectations for a low-single digit decline against a continued mixed and multi-speed economy ― Organic sales down 1% versus all-time quarterly record sales in the prior year period and up 5% sequentially ― EES and CSS organic sales
Slide 4: Second Quarter YOY Results
Second Quarter YOY Results Solid results against continued mixed and multi-speed economy Net Sales1 $ millions $5,746 $5,480 • Organic sales down 1%, reported sales down 5% • Estimated growth from price of ~2% • Sales volume lower against all-time record sales in the prior year and multi-speed econo
Slide 5: Second Quarter Sequential Results
Second Quarter Sequential Results ~100bps sequential increase in adjusted EBITDA margin Net Sales1 $ millions $5,480 • Organic sales up 5%, reported sales up 2% $5,350 • All three SBUs up sequentially on organic basis EES organic sales up 2%, reported sales up 4% CSS organic sales up 10%, report
Slide 6: Wesco Has Outgrown Suppliers and Peers Over Multi-Year Period
Wesco Has Outgrown Suppliers and Peers Over Multi-Year Period Growth versus Wesco’s Top 10 Growth versus Distribution Peers 30% Publicly-Traded Suppliers 30% 20% 20% 10% 10% 0% 0% (10)% (10%) Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 2021 2021 2021 2021 2022
Slide 7: Electrical & Electronic Solutions (EES)
Electrical & Electronic Solutions (EES) Solid sequential and year-over-year margin improvement Second Quarter Drivers $ millions • Organic sales down 1%, reported sales down 1% YOY Q2 Q2 YOY – Construction down LSD as growth from large project shipments 2024 2023 offset by continued weakness in sola
Slide 8: Communications & Security Solutions (CSS)
Communications & Security Solutions (CSS) Meaningful data center growth acceleration offset by margin mix Second Quarter Drivers $ millions • Organic sales up 1%, reported sales up 1% YOY Q2 Q2 – Data Center up high-teens driven by growth in hyperscale and MTDC, and YOY 2024 2023 enterprise – Enterp
Slide 9: Utility & Broadband Solutions (UBS)
Utility & Broadband Solutions (UBS) Strong margin performance against near-term utility market softness Second Quarter Drivers $ millions • Organic sales down 3%, reported sales down 15% YOY due to the Integrated Supply divestiture Q2 Q2 – Utility sales down LSD on tough comparable in the prior year
Slide 10: Highlighting Recent Large Wins
Highlighting Recent Large Wins EES CSS UBS Customer Customer Customer Global EPC and construction services Global technology company One of the largest renewable energy provider companies in the world Summary Summary Summary Awarded a $20+ million contract to support $50+ million win with a leading
Slide 11: Upsized Cash Generation Supporting Increased Return of Capital
Upsized Cash Generation Supporting Increased Return of Capital Capital Allocation 2021 – 2024E 2024 Priorities • Fully utilized Integrated Supply divestiture net proceeds of Preferred Dividends ~$300 million to repurchase ~1.7 million shares in the second Common Dividends Preferred Dividends quarter
Slide 12: Free Cash Flow
Free Cash Flow Over $900 million on a trailing 12-month basis (through 6/30/24) $ millions $(44) $24 $101 $(89) $207 $914 $715 128% of Adjusted Net Income Adjusted D&A Accounts Inventory Accounts Capex Free Net Income and Other Receivable Payable Cash Flow ~$400 million free cash flow in 2H 2023; $5
Slide 13: 2024 Strategic Business Unit Sales Growth Drivers
2024 Strategic Business Unit Sales Growth Drivers % of Wesco 2024 Outlook 2024 Outlook SBU Sales 2024 Outlook 2024 Outlook 2023 Sales1 (May ’24) (August ’24) Breakdown 2 (May ’24) (August ’24) Construction Electrical & Electronic Solutions 40% Flat-to-Up Industrial Flat-to-Up LSD LSD OEM Enterprise
Slide 14: 2024 Outlook
2024 Outlook 2024 Outlook 2024 Outlook May August Organic sales Flat to 3% (1.5)% to 0.5% Plus: impact of two additional 1% 1% workdays in 2024 Sales Integrated Supply Divestiture Impact1 ~(3)% ~(3)% Reported sales growth (2)% to 1% (3.5)% to (1.5)% Reported sales $21.9 – $22.6 billion $21.6 – $22.0
Slide 15: Third Quarter Outlook
Third Quarter Outlook Improving momentum through Q2 Organic Sales Trends 20% Q1-23 Q2-23 Q3-23 Q4-23 Q1-24 Q2-24 +11% +3% +3% (3)% (3)% (1)% Q3 Outlook Down LSD to flat Reported Sales sequentially 0% EBITDA % ~In-line sequentially (10)% Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr
Slide 16: 2024 Investor Day
SAVE THE DATE 2024 Investor Day Wesco International | September 26
Slide 17: Appendix
APPENDIX wesco
Slide 18: Glossary
Glossary 1H: First half of fiscal year MTDC: Multi-tenant data center 2H: Second half of fiscal year PF: Pro Forma A/V: Audio/visual PY: Prior Year B2B: Business-to-Business OEM: Original equipment manufacturer COGS: Cost of goods sold OPEX: Operating expenses CIG: Commercial, Institutional and Gove
Slide 19: Workdays
Workdays Q1 Q2 Q3 Q4 FY 2021 62 64 64 62 252 2022 63 64 64 62 253 2023 63 64 63 62 252 2024 63 64 64 63 254 19
Slide 20: Non-GAAP Measure Definitions
Non–GAAP Measure Definitions Organic sales growth is a non-GAAP financial measure of sales performance. Organic sales growth is calculated by deducting the percentage impact from acquisitions and divestitures for one year following the respective transaction, foreign exchange rates, and number of wo
Slide 21: Organic Sales Growth by Segment
Organic Sales Growth by Segment $ millions Organic Sales Growth by Segment - Three Months Ended: Three Months Ended Growth/(Decline) Foreign Organic June 30, 2024 June 30, 2023 Reported Divestiture Exchange Workday Sales EES $ 2,172.9 $ 2,200.3 (1.2) % — % (0.6) % — % (0.6) % CSS 1,865.9 1,850.9 0.8
Slide 22: Gross Profit and Free Cash Flow – Quarter
Gross Profit and Free Cash Flow – Quarter $ millions Three Months Ended Gross Profit: June 30, 2024 June 30, 2023 Net sales $ 5,479.7 $ 5,745.5 Cost of goods sold (excluding depreciation and amortization) 4,281.7 4,503.1 Gross profit $ 1,198.0 $ 1,242.4 Gross margin 21.9 % 21.6 % Three Months Ended
Slide 23: Free Cash Flow – Trailing Twelve Months
Free Cash Flow – Trailing Twelve Months $ millions Twelve Free Cash Flow: Months Ended Q3 2023 Q4 2023 Q1 2024 Q2 2024 June 30, 2024 Cash flow provided by (used in) operations 361.7 69.3 746.3 (223.8) 953.5 Less: Capital expenditures (19.3) (28.7) (20.4) (20.8) (89.2) Add: Other adjustments 14.7 18.
Slide 24: Adjusted EBITDA – 2Q 2024
Adjusted EBITDA – 2Q 2024 $ millions Three Months Ended June 30, 2024 EBITDA and Adjusted EBITDA by Segment: EES CSS UBS Corporate Total Net income attributable to common stockholders $ 179.3 $ 114.3 $ 268.5 $ (344.4) $ 217.7 Net income (loss) attributable to noncontrolling interests 0.1 0.7 — (0.1)
Slide 25: Adjusted EBITDA – 2Q 2023
Adjusted EBITDA – 2Q 2023 $ millions Three Months Ended June 30, 2023 EBITDA and Adjusted EBITDA by Segment: EES CSS UBS Corporate Total Net income attributable to common stockholders $ 167.0 $ 132.2 $ 183.1 $ (303.6) $ 178.7 Net (loss) income attributable to noncontrolling interests (0.7) 0.1 — (0.
Slide 26: Adjusted EBITDA – 1Q 2024
Adjusted EBITDA – 1Q 2024 $ millions Three Months Ended March 31, 2024 EBITDA and Adjusted EBITDA by Segment: EES CSS UBS Corporate Total Net income attributable to common stockholders $ 148.2 $ 88.4 $ 160.8 $ (296.0) $ 101.4 Net income (loss) attributable to noncontrolling interests (0.4) 0.4 — 0.3
Slide 27: Adjusted EPS
Adjusted EPS Three Months Ended $ millions, except per share amounts June 30, 2024 June 30, 2023 Adjusted SG&A Expenses: (1) Loss on abandonment of assets represents the write-off of certain capitalized cloud Selling, general and administrative expenses $ 828.4 $ 831.7 computing arrangement implemen
Slide 28: Adjusted Earnings Per Diluted Share
Adjusted Earnings Per Diluted Share $ millions Three Months Ended Adjusted Earnings per Diluted Share: June 30, 2024 June 30, 2023 Adjusted income from operations $ 348.3 $ 385.3 Interest expense, net 98.8 98.8 Adjusted other expense, net 3.2 0.8 Adjusted income before income taxes 246.3 285.7 Adjus
Slide 29: Capital Structure and Leverage
Capital Structure and Leverage $ millions Twelve Months Ended June 30, December 31, Financial Leverage: 2024 2023 Net income attributable to common stockholders $ 665.9 $ 708.1 Net income attributable to noncontrolling interests 2.2 0.6 (1) Merger-related and integration costs include integration an